Peter Navarro Responds to His Trade Critics

March 24, 2017

My op-ed on why trade deficits matter (“Why the White House Worries About Trade Deficits,” March 6) has generated a healthy debate. However, your March 10 lead editorial implausibly asserts, “Perhaps the best way to think about the U.S. trade deficit is not to think about it.”

[Peter Navarro| March 22, 2017 |The Wall Street Journal]

As for the March 13 letters: Cato’s Dan Ikenson’s insistence that trade deficits don’t matter fits neatly into other key elements of his Alice-in-Wonderland worldview, e.g., currency manipulation is not worth trying to remedy, antidumping law is a “vice” that does “not ensure a level playing field,” and the World Trade Organization dispute settlement process shows no “anti-American bias.”

Pinar Wilber’s red herring reference to the Smoot-Hawley tariffs to defend a free-trade theory with no basis in reality is seven degrees removed from the abandoned factories of Ohio, Michigan and Pennsylvania.

Desmond Lachman’s tired insistence that savings and investment patterns is the only thing that drives trade deficits rather than mercantilist policies ignores obvious general equilibrium effects. For example, if India agrees to lower its tariffs on Harley Davidsonmotorcycles, Indian consumers will buy more Harleys and save less while Harley will sell more Harleys and invest more. Truly fair and reciprocal trade between the U.S. and its trading partners, rather than the perpetual turn of the screw we receive now, will lead to a thousand similar kinds of adjustments as our bilateral trade deficits fall and savings and investment patterns adjust.

Showing 5 reactions

Please check your e-mail for a link to activate your account.
  • Dark Comedy Economics
    A much more radical argument from an American engineer: There has never been a sound theory of economics, and there is no relationship between investment and saving. You cannot fix a car if you don’t really understand how it works; same for an economy. httpsscuingeconomics.wordpress.com/2016/04/15/trade-deficit-delusions/
  • Bruce Bishop
    I agree with Mr. Kirkland that we should treat each of our trading partners differently as regards our trade deficit. Our problem is with China, which took the jobs that we could and should be doing here. As to Germany and Japan, they have superior products that Americans want. I am really not concerned with those trade deficits. They are not cheating us like China is. Also, they are not “destroying the planet,” like China is. They do not have the human rights abuses that China has.

    Read “Death by China,” or watch the video on YouTube. Then, you will understand where Navarro is coming from. If we don’t fix the China problem, we are doomed as a nation. Japan and Germany are allies, but they might be doomed for other reasons. And as to poor Mexico, I would love to see Trump help to “Make Mexico Great Again,” so that their people are not risking their lives to come here.
  • Harry Moser
    Great article. In addition to Harley investing more, employees of Harley and its suppliers will work more, pay more taxes, take less safety-net , and save more. The goods they all purchase will be made in the U.S., driving another round of work, investment and savings.
  • Franklin Kirkland
    Buffett’s Import Certificate marketplace as referenced by Mr Bishop is indeed attractive but has one disqualifying flaw. It lumps all imports and exports together and thus its imposition would unfairly impact our balanced trading partners negatively while having disproportionately less impact on China, Germany, etc. This can be rectified. Since 10 countries comprise 90% of our trade deficit, and each has a substantial bilateral trade flow with the US, separate certificates should be traded for each, thus directly addressing the bilateral trade imbalances. The remaining 10%, while smaller, must still be addressed to prevent pass through abuses by the top 10. These could be addressed by an “other” category of certificates.
  • Bruce Bishop
    Peter Navarro and Greg Autry wrote an excellent book entitled “Death by China,” which details the many ways in which China is cheating us on trade. China has been stealing our technology, our intellectual property, and our jobs, for decades. China is draining our wealth, not to improve the lives of its people, but to build up its military and to enrich the honchos of the Chinese Communist Party. Here is a link to the trailer for the documentary film version of “Death by China,” which is available free on YouTube. https://www.youtube.com/watch?v=p9pXRSzFcKg

    As a victim of globalization, I have been watching this unfold since 1985. The entire industry, of which I was a part, had been offshored to China by 1995, closing dozens of factories and putting tens of thousands of Americans out of work.

    The Chinese cost advantage, in all cost factors, is so great, that no politically viable tariff or border tax will bring back our jobs. Also, the barriers to re-entry are so great that no sensible entrepreneur is going to invest the time and money it would take to build a factory here, knowing that our government would likely sell them out after the next election.

    I supported Trump, in part, because of his promise to “make China play fair.” His proposed tariffs will not succeed. The only way to bring back our manufacturing jobs is to impose hard limits on our trade deficit as proposed by Warren Buffett back in 2003 in the Fortune article. http://archive.fortune.com/magazines/fortune/fortune_archive/2003/11/10/352872/index.htm